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03/03/2014

End the Cuban Embargo—Posner

I agree with Becker that we should end the embargo. It was first imposed in 1960, two years after Castro took power, and strengthened after the Cuban missile crisis in 1962, and thereafter modified from time to time—and recently somewhat relaxed, so that today in fact we have several billions of dollars in trade with Cuba each year.

Communist Cuba in Castro’s heyday, before the collapse of the Soviet Union followed by the rapid collapse of communism in all countries except North Korea—and Cuba—was, even apart from the missile crisis, an active although not dangerous enemy of the United States, supporting and fomenting communist subversion against a variety of nations some of them allies of the United States. But the embargo was never much more than an annoyance to Cuba, because the embargo was not joined by other nations. And it is not as if the United States were the only source of a raw material or manufactured good essential to the Cuban economy. Or that the United States were the sole destination for goods produced by Cuba that Cuba had to export in order to obtain foreign currency. Cuba’s principal exports were and are sugar and tobacco. When the United States as part of the embargo stopped importing these products from Cuba, it increased its imports of them from elsewhere, which meant that other nations that produced those goods diverted some of their output to the United States. The countries they had been buying sugar and tobacco from these other exporting countries had either to pay a higher price to them so that they would not divert output to the United States—or buy from Cuba. So the embargo closed one destination for Cuban exports, the United States, but opened up others.

Apparently the embargo had some small negative effects on the Cuban economy, but one imagines that its major effect was actually to bolster Castro by giving him an excuse for the awful performance of the Cuban economy—the U.S. embargo. The true cause of that awful performance was communism; for we know from the economic performance of the other communist countries, before communism collapsed almost everywhere, that communist economies, by suppressing the operation of free markets in goods and services, are grossly inefficient. Castro hurt Cuba with his policies, but actually helped the United States by impelling the emigration of many of Cuba’s ablest, most energetic citizens to the United States.

But to all this the embargo was and continues to be almost completely irrelevant. Its persistence is probably owed largely to the political influence of Cuban-Americans, who will do anything to hurt Castro’s regime and whoe live (and vote) mainly in Florida, where they form a significant electoral bloc. The nation’s fourth largest state by population, Florida is the most important swing state in the American electoral system.

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The Cuban Embargo? Is that thing still in effect? Talk about a relic from the Cold War. We now have better trade relations with our primary adversary of that old time period; Russia (provided the trade agreements don't get torpedoed by the current Ukraine/Crimea "crisis"). As for the "pork" handed out to a voting block in Florida, talk about the "tail wagging the dog". From a purely economic viewpoint, what are the benefits from continuing it as opposed to ending it. This is the only analysis that should be followed in dealing with that relic...

The Cuban Americans, not to mention citizens of other countries, had their wealth stolen by Castro, just as the Nazis stole the artworks of the Jews and others.

Justice demands that restitution first be made; then we can talk about opening doors to Cuba. It is not important that the restitution come from Cuba, a totally impoverished country, but it would be in the interests of all Amerikans to pay restitution to all those whose wealth was stolen by Castro. Then we can talk about opening trade with Cuba.

Jim, Really? I have a good friend whose Grandfather and Father owned a Shoe Factory in Cuba. Too hear him tell it, "If Cuba hadn't been under the thumb of the Mafia, Batista and his Cronies (stealing everything they could get their hands on); Castro, Guevara and the July Revolution would have ended up stuck in the hills with the mosquitos. As for the Shoe Factory, it would have ended being bankrupted by the Asiatic shoe industry instead of being Nationlised".

Your appeal to "Justice" reminds me that many times "justice is nothing more than the province of scroundels".

Jim Kirby: At what point does an understandable desire for restitution need to be separated from simple recognition? Or should that never happen? USA recognition of its former enemies has historically not been prohibited solely on the basis of a demand for restitution.

Even recognition of Germany after WWII did not result in a general repatriation or restitution to people who left the country or forfeited property via the Nuremberg laws.

Would you advocate any kind of time limit on the tying of recognition to restitution?

The US embargo on Cuba back in the 1960's was a must, due to the betrayal of Cuba. The secretive operations by Cuba and Russia to install nuclear missiles in Cuba was deceitful of both nations. With that being said the embargo on Cuba was a good decision. Cuba's economy being hindered by a communism ruler is not the real reason why they've chugged along with a slow economic growth, however the fact that they are a communist run nation does factor into the reason why they're behind. Cuba has the ability to trade with other surrounding nations besides the US to increase their economic growth. The author of this article does a good job demonstrating the difference between a communist run nation and a non-communist nation by using North and South Korea. It also doesn't help that Cuba's main export is sugar and tobacco.

Neil: Agreed! While posting a bit on the Becker side, I note that Cuba is a nation of 11 million with $6,000 per capita GDP (about like China)

While an embargo in the JFK era might have had some teeth in it (with us being the only nation to mfg many products) today Cuba can find virtually everything they need from nations that do trade with them.

In the matter of trade, I assume most here understand comparative advantage? ie..... Were, say Britain 10 times less efficient at growing wheat than the US, and only 2 times less efficient at growing tomatoes, they would still benefit by selling some of their "uncompetitive" tomatoes to buy wheat.

With trade (as they tell us in regard to China) comes increasing levels of working together. Someone has to go there to make the deal and is likely to spot other opps that benefit both parties.

Nahom: Sure, "sugar" likely threatens our corn lobby/cabal but then? today we see premiums being paid for "cane sugar" in colas and other products. IF...... we were honest, we'd benefit from having Cuba (and Mex?) make some of our mandated ethanol from cane which is about 8 times more efficient than corn based eth which uses as many btu's to make as is created. Brazil runs much of its fleet on cane/ethanol while in the US all that corn doesn't multiply the oil consumed in its mfg at all.

And think beyond what is the decreasing importance of raw materials. Today, developed economies are 70% driven by consumer demand, and a major part of the US malady is that of huge over-capacity of mfg and distributed goods.

Ending the embargo in Cuba would open up a nation with a GDP that would rank about 35th in the GDP's of our states and one starved for those many goods that households buy in the more developed nations.

My guess is that Cuba's communist government will soon come to an end that will be sped by ending the embargo. But, hey, if they remain a relatively isolated "communist nation" what is the risk to us or anyone else? As for the oppressed people, half a century of an ineffective US embargo has done nothing positive either.